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BCG Matrix

The document discusses the BCG matrix, which classifies business units into four categories - stars, question marks, cash cows, and dogs - based on their relative market share and market growth rate. It provides details on each category and how products move between them over their lifecycle. Benefits of the model include its simplicity and how it can help allocate resources, while limitations are its focus on only two factors and neglect of small competitors.

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Diksha Chauhan
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63 views13 pages

BCG Matrix

The document discusses the BCG matrix, which classifies business units into four categories - stars, question marks, cash cows, and dogs - based on their relative market share and market growth rate. It provides details on each category and how products move between them over their lifecycle. Benefits of the model include its simplicity and how it can help allocate resources, while limitations are its focus on only two factors and neglect of small competitors.

Uploaded by

Diksha Chauhan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Business Level Strategies:

BCG Matrix

Submitted By:
Diksha Chauhan
IUU18MBA074
1
INDEX

❑ Introduction
❑ Market Share
❑ Market Growth Rate
❑ BCG Matrix
• Stars
• Question Mark
• Cash Cows
• Dogs
❑ Benefits & Limitations
❑ Example
2
INTRODUCTION

❑ BOSTON CONSULTING GROUP (BCG) Matrix was developed by Bruce


Henderson of the Boston Consulting Group in the early 1970’s

❑ According to this technique, business or products are classified as low or


high performance depending upon their market growth rate & relative
market share.

❑ To understand the Boston Matrix you need to understand how market share
and market growth interrelate.

3
MARKET SHARE

 Market share is the percentage of the total market that is being serviced by your
company, measured either in revenue terms or unit volume terms.
 RELATIVE MARKET SHARE
 RMS = Business unit sales this year
Leading rival sales this year
❑ The higher your market share, the higher proportion of the market you control.

4
MARKET GROWTH RATE

 Market growth is used as a measure of a market’s attractiveness.


 MGR = Individual sales this year - individual sales last year
Individual sales last year
❑ Markets experiencing high growth are ones where the total market share
available is expanding, and there’s plenty of opportunity for everyone to make
money.

5
THE BCG GROWTH-SHARE MATRIX

 It is a portfolio planning model which is based on the observation that a


company’s business units can be classified in to four categories:
• Stars
• Question marks
• Cash cows
• Dogs
❑ It is based on the combination of market growth and market share relative to the
next best competitor.

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 STAR
High growth, High market share
• Stars are leader in business
• They also require heavy investment to maintain it’s large market share.
• It leads to large amount of cash consumption & cash generation.

❑ QUESTION MARKS
High growth , Low market share
• Most business start of as question marks
• Question marks have potential to become star & evenly cash cow but can
also become dog.
• Investment should be high for question marks.

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❑ CASH COWS
Low growth , High market share
• They are foundation of the company & often the stars of yesterday.
• They extract the profits by investing as little cash as possible
• They are located in an industry that is mature not growing or declining

 DOGS
Low growth, Low market share
• Dogs are the cash traps.
• Dogs do not have potential to bring in much cash.
• Number of dogs in the company should be minimized.
• Business is situated at a declining stage.

9
PRODUCT LIFECYCLE & BOSTON MATRIX

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BENEFITS LIMITATION
• BCG matrix is simple & easy to • BCG matrix uses only two
understand dimensions-relative market share
• It provides a base for management to & market growth rate.
decide and prepare for future actions • Problem of getting data on market
• It is used to identify how corporate share & market growth
cash resources can best be used to • High market share is not the only
maximize company’s future growth & success factor
profitability. • The model neglects small
competitors that have fast growing
market shares

11
IPhone Apple TV

Apple’s Laptops Apple iPods


Apple iTunes &
MacBook

12
Thank you

13

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